Presently, Brazil is the country in Latin America which has
attracted the most interest in the development of the Internet industry.
There are several reasons for the privileged status of Brazil.

First of all, it is the largest Latin American country in
terms of physical size (about 90% of the size of continental USA) and, more
importantly, population size (over 160 million persons). Anyone who
operates in Brazil has immediate access to this huge potential market.

Secondly, Brazil has an advanced traditional media
(print/television/radio) sector, and the major media players are all
well-financed, well-positioned and committed to establishing themselves in
the Internet arena. The print giant Editorial Abril owns the
Brazil's largest ISP, UOL (Universo OnLine) which carries many of the top
Abril magazine websites as part of its proprietary content. The
television giant Globo has made a late start, but will have all its
television content and cable television systems behind it. Already,
some Brazilian banks are offering free Internet access to their
customers.

Thirdly, there are many major foreign companies (such as
Microsoft, AOL, StarMedia, Terra, etc) who are ready to invest heavily in
their efforts to expand globally.

In many countries, the state of the Internet is subject to a
great deal of hyperbole, with various estimates of the size of the Internet user
community that vary by orders of magnitude. In the case of Brazil, we are
rather fortunate in having an established research tracking study that is
published regularly. We are referring to the Pesquisa Internet Brasil
conducted by IBOPE Midia.

In February 2000, the 5th edition of the Pesquisa Internet
Brasil was published. This was a survey covering persons 10 years of
older in nine major cities (São Paulo, Rio de Janeiro, Curitiba, Porto Alegre,
Belo Horizonte, Distrito Federal, Fortaleza, Salvador and Recife). In all, a sample
of 15,392 persons were interviewed during December 1999.
It is important to note that the Pesquisa Internet Brasil is a general
population survey, which is the only way to obtain penetration estimates.

According to the 5th edition of the Pesquisa Internet
Brasil, 3.3 million (or 9%) of the survey population of 36 million persons
use computers to access the Internet. This is the bottom-line summary
statistic for the state of the Internet in Brazil. The Pesquisa
Internet Brasil also has information about home versus work usage, Internet
activities, e-purchases and satisfaction with ISPs, with profiles by age, sex,
social class and education.

The Pesquisa Internet Brasil sheds some light about the
short-term and long-term prospects for the Internet in Brazil. For
example, focusing on home Internet access, we have the following classification
of the population:

Home Telephone

Home Computer

Home Internet Access

% of population

Yes

Yes

Yes

7.4%

Yes

Yes

No

5.5%

Yes

Yes

Not sure

1.0%

Yes

No

No

37.1%

No

Yes

No

1.3%

No

No

No

47.8%

We note the following:

The 7.4% represent the size of the current
home Internet user population

The 5.5% represents the immediate potential
increase in home Internet user population, since in principle these
people have the technological infrastructure to proceed. In fact, 64%
of these people (or 3% of the population) indicated that they would like
to be able to access the Internet.

The 37.1% of people with telephone but no
computers represent a harder sell, and the diffusion of the Internet will be
slower among this group. The issues here are as much reduced costs
of computer equipment and Internet access as education and training
about computer technology and also setting and meeting consumer
expectations.

Unlike the situation in the USA, where
telephone penetration is over 90% of the population, almost half of the
Brazilian population do not have telephone. After all, Brazil is still
a country with severe socio-economic inequality. As such, until these
larger socio-economic issues are resolved, this is a barrier for the
widespread adoption of Internet access.